Accrol posts operating loss, cites rising input costs, adverse FX
Source - SMW
Accrol Group Holdings plc, an independent tissue converter and supplier, announced an operating loss of £5.7 million for the six-month period through 31 October 2017.
In the six month period, Accrol incurred an operating loss of £5.7 million compared to a reported operating profit of £3.9 million in the prior year first half.
The company reported profitability for the six months ended 31 October 2017 significantly below prior year levels as adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell by £8.7 million to a loss of £1.6 million. That paled in comparison with a first half full-year 2017 adjusted EBITDA of £7.1 million.
The company highlighted several factors that weighed on profitability including rising input costs, adverse foreign exchange movements, and internal cost growth.
'The Group's recent problems have arisen from the combination of adverse factors, including rising input costs - tissue cost growth following upstream pulp cost growth - adverse FX and internal cost growth - increases in the fixed cost base as a consequence of the new logistics arrangements at Skelmersdale, the new Leyland plant and changes to shift patterns in mid-2017, at a time when the business was managing an overly complex product portfolio,' said Gareth Jenkins, Chief Executive Officer of Accrol.
The company said it expects adjusted EBITDA to remain under pressure through 30 April 2018 but noted significant progress was underway to resolve EBITDA headwinds.
'Whilst the Board continues to expect a small loss at the adjusted EBITDA level for the financial year ending 30 April 2018, the Board is comfortable that the Group will continue to operate within its borrowing covenants while work on the turnaround continues and the directors look forward to the longer-term future of Accrol with confidence,' Accrol said in a trading statement.
At 8:38am: (LON:ACRL) Accrol Group Hldgs Plc share price was 0p at 36p